UNIVERSIDAD CENTRAL

Facultad de ciencias administrativas, econmicas y contables

Departamento de Economa
Principles of Economics
Prof. Juan Sebastian Munoz Rivera
Por Luis Alejandro Castro P.

Issues with Development Economics

Development economics is a field in economic studies which takes care of the economic
development on low income countries, and it seeks for analyzing and applying methods and policies
to achieve development on poor countries. But even when this theories have been around for nearly
70 years, we still have huge problems with inequality, hunger, sickness, low welfare and poverty in
general.

Method
One of the most spread critics is on how to measure the development of a nation, as it usually is
calculated by the GDP per capita, but it doesnt tell you much about income distribution or standard
of living, and that can ultimately lead to a misconception of when and where to apply economic
policies that seek to stimulate development.
Economists have attempted to solve this problem by using other ways of measuring different factors
that affect development, such as the Human Development Index (HDI), which takes into account
three factors: GDP per capita, life expectancy, and education, or the Gini coefficient, which
represent the income distribution of a nation's population, but this methods still have some level of
inaccuracy and are also heavily linked to the income of a person as a main factor for his wellbeing.
The welfare as a whole
Income is not therefore a precise method for measuring development, and because of that,
economists are now taking into account many other factors of a persons needs such as their health
level, education level, housing conditions and even their happiness.
This should sound more logical than focusing only on Income, but this whole is from a statistics
point of view- nearly impossible to achieve, and in addition to the difficulty to collect and analyze
all of this data, orthodox economists criticize this methods by saying theyre more concerning to
other fields of study such as psychology, sociology or anthropology. And that economists should
focus only on the measurable variables and the utility of goods and services seen from a strictly

mathematics formalized way. This opens up a whole new debate on what should economists and
economic sciences take care of.

Corruption
In addition to the method issues, the application of development-oriented policies on developing
countries is really hard to achieve. One of the causes of the delay on development of the poorer
countries compared to the richest is the enormous corruption that exists on the governments of the
under-developed.
When you have corruption and political instability, its hard to apply and maintain over time policies
that are oriented to overcome under-development. In poor countries, this policies usually work on
hidden political agendas and different interests other than improving the general wellbeing.

The study and execution of development economics appears to have a debt with the people for
which theyre expecting to improve the living standards. Especially neoclassical theory, which is
going in the wrong path when it assumes perfect markets on economies that are overrun by
distortions such as cartels or politics-guided economic policy, as well as advising and applying
methods and policies that are known to be a failure when it comes to show real and tangible positive
results on the field, and not only on the theory. It is of highly need to have a change on the paradigm
of neo-classical approach to development economics and to start accepting new theories, even
when they are not strictly supported by mathematics, or come from fields of study different than
economics, and it is also needed to stop looking at development linked to the maximization of utility,
and start considering it as a way to improve general human quality of life.